Method for protecting equity in purchased goods

ABSTRACT

A method  10  for protecting equity in purchased goods that are disposed of during a predetermined time period after purchase, includes establishing the purchase date and price for the purchased goods  14 , determining a purchaser&#39;s equity in the purchased goods on the purchase date  16 , selecting a time period for protecting the purchaser&#39;s equity in the purchase goods  18 , determining a purchaser&#39;s equity in the purchased goods on a disposition date for the purchased goods  26 , calculating the difference between the purchaser&#39;s equity and a fair market value for the purchased goods on the disposition date  30 , and paying the purchaser a computer determined amount when the purchaser&#39;s equity is greater than the fair market value for the purchased goods on the disposition date  32, 40  and  42.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to protecting equity in purchased goods,and more particularly, to protecting the downpayment for procuringpossession of a purchased vehicle during a predetermined time period.

2. Background of the Prior Art

A purchaser of goods, vehicles in particular, typically pays adownpayment and procures financing to complete the purchase transactionand procure possession of the goods or vehicle on the date of sale. Thepurchaser's downpayment is usually the purchaser's equity in thepurchased products; although, the purchaser's equity can be greater orless than the downpayment when purchasing products with unknown ordifficult to determine fair market values. Generally, an insurancepolicy (“Gap Insurance”) is also procured on the sales date to obtainpossession of the goods or vehicle. An up-front one time payment is madeby the purchaser to procure the Gap Insurance policy which protects thefinance company and/or purchaser in the event that the goods or vehicleare damaged. When the goods or vehicle are damaged such that the cost ofrepair is greater than the fair market value of the goods or vehicle,the Gap Insurance pays the finance company a dollar amount equal to theloan balance minus the fair market value of the goods or vehicle in anundamaged condition on the date of damage.

A problem occurs when the goods or vehicle depreciate relatively fastafter purchase, and the goods or vehicle become damaged, lost, stolen orsold within a relatively short time period after purchase, resulting ina substantially reduced fair market value for the goods or vehicle. Thedepreciation of the goods or vehicle results in the purchaser losing acorresponding portion of his or her downpayment when payments arereceived to compensate the purchaser for the loss of the goods orvehicle. Thus, the purchaser is forced to raise more funds to purchase areplacement vehicle or goods that, from the purchaser's perspective,perform the same function and are of equal value, from the purchaser'sviewpoint, to the original products. These common results pertaining todamaged, lost, stolen or sold goods or vehicles are unfair to thepurchaser.

A need exists for a method for protecting, on the purchase date, thepurchaser's downpayment and/or equity in the purchased goods or vehiclein the event that the goods or vehicle are damaged, lost, stolen orsold. The method must allow the purchaser to select on the purchasedate, a time period to protect his or her equity in the purchased goodsor vehicle. Further, the method must allow the purchaser to determine onthe purchase date, a reasonable amount of money that he or she willreceive for any day during the selected time period that the goods orvehicle are lost, stolen, damaged or sold. Also, the method must providethe parameters for procuring an insurance policy for the purchaser'sbenefit to guarantee the amount of money the purchaser is to receive inthe event the goods or vehicle are damaged, stolen, lost or sold duringthe selected time period.

SUMMARY OF THE INVENTION

It is an object of the present invention to overcome many of thedisadvantages associated with protecting equity in purchased goods thatare damaged with a predetermined time period after purchase. It isanother object of the present invention to overcome many of thedisadvantages associated with protecting equity and/or downpayment inpurchased vehicles that depreciate in value relatively quickly afterpurchase.

A principal object of the present invention is to provide a method thatallows a purchaser of goods to determine his or her equity in thepurchased goods on the purchase date. A feature of the method is thatthe purchaser's equity in the purchased goods determined on the purchasedate, is negotiated between the purchaser and an insurance company, theinsurance ultimately issuing an insurance policy that guarantees thedetermined purchaser's equity in the purchased goods. An advantage ofthe method is that the dollar amount of the determined purchaser'sequity in the purchased goods is based on a reasonable value that thegoods provide to the purchaser rather than a typical fair market value.

Another object of the present invention is to provide a method thatallows a purchaser on the purchase date of the goods to select a timeperiod for protecting the determined purchaser's equity in the purchasedgoods. A feature of the method is that on the purchase date of thegoods, the purchaser's equity in the purchased goods is set for a timeperiod that the purchaser excepts to own the purchased goods. Anadvantage of the method is that the purchaser's equity in the purchasedgoods is not reduced over time due to depreciation parameters.

Another object of the present invention is to provide a method thatdetermines a purchaser's equity in the purchased goods on a damage orsales date for the purchased goods. A feature of the method is that onthe purchase date of the goods, the purchaser's equity in the purchasedgoods is determined for each day of the selected time period. Anadvantage of the method is that on the purchase date of the goods, thepurchaser knows the dollar amount he or she will receive for thepurchased goods in the event the purchased goods are sold or damagedduring the selected time period.

Another object of the present invention is to provide a method thatcalculates the difference between the purchaser's equity and a fairmarket value for the purchased goods on the damage or sales date. Afeature of the method is that a computer ultimately determines thepurchaser's equity in the purchased goods based upon a negotiated amountbetween the purchaser and an insurance company, or is based upon analgorithm agreed upon by purchaser and insurance company, then enteredinto the computer. Another feature of the method is that a fair marketvalue for the purchased goods on a damage or sales date is entered intothe computer. An advantage of the method is that the computer quicklydetermines the dollar amount the purchaser is to be paid based upon thepurchaser's equity in the purchased goods on the damage or sales date ofthe purchased goods.

Briefly, the invention provides a method for protecting equity inpurchased goods that re damaged within a predetermined time period afterpurchase, said method comprising the step of establishing the purchasedate and price for the purchased goods; determining a purchaser's equityin the purchased goods on the purchase date; selecting a time period forprotecting said purchaser's equity in the purchased goods; determining apurchaser's equity in the purchased goods on a damage, lost, stolen orsales date for the purchased goods; calculating the difference betweensaid purchaser's equity and a fair market value for the purchased goodson the damage or sales date; and paying the purchaser a computerdetermined amount when said purchaser's equity is greater than the fairmarket value for the purchased goods on the damage or sales date.

The invention further provides a method for maintaining equity in avehicle for a predetermined time period after purchasing the vehicle,said method comprising the steps of recording the purchase date andprice of the vehicle; recording the amount paid by a purchaser of thevehicle on the purchase date; determining a time period for maintaininga purchaser's equity in the vehicle; calculating said purchaser's equityfor the vehicle on a selected day during said time period; and payingthe purchaser a computer determined amount.

The invention further provides a method for insuring a purchaser'sdownpayment when purchasing a vehicle, said method comprising the stepsof entering vehicle purchase parameters into a computer; entering avehicle ownership time period into said computer; calculating via saidcomputer, a purchaser's equity in the vehicle over said ownership timeperiod; and paying an insurance premium to an insurance company toinsure said calculated purchaser's equity in the vehicle over saidownership time period whereby the purchaser receives a payment from theinsurance company in the event that the fair market value of the vehicleis insufficient for the purchaser to receive a calculated equity on adate, within said ownership time period, that the vehicle is sold, lost,stolen or damaged.

BRIEF DESCRIPTION OF THE DRAWINGS

These and other objects, advantages and novel features of the presentinvention, as well as details of an illustrative embodiment thereof,will be more fully understood from the following detailed descriptionand attached drawings, wherein:

FIG. 1 is a flow chart depicting a method for protecting equity inpurchased goods that are damaged or sold within a predetermined timeperiod after purchase.

DESCRIPTION OF THE PREFERRED EMBODIMENT

Referring now to the flow chart of FIG. 1, a method for protectingequity or a purchaser's downpayment in purchased goods that are damaged,lost, stolen or sold within a predetermined time period after purchaseis denoted by numeral 10. The purchaser's downpayment includes but isnot limited to cash, rebates, trade items “trade-ins,” services, leasesor combinations thereof. More specifically, the method 10 protects thepurchaser's downpayment from being lost or reduced due to depreciationof the purchased goods over a relatively short period of time.Typically, when goods, especially vehicles, are purchased, thedepreciation can cause the fair market value (which is determined viamethods well known to those of ordinary skill in the art) of the vehicleto be less than the amount required to finance the purchase. Generally,an insurance policy is procured that protects (irrespective ofdepreciation) a finance company's loan amount required to purchase thevehicle, however, there is no insurance policy in place that protectsthe purchaser's equity or downpayment.

Referring now to block 12, a computer is utilized to receive informationpertaining to purchased goods, and in particular, to informationpertaining to a purchased vehicle. The computer can be a desk-top orlap-top, both well known to those of ordinary skill in the art.Information pertaining to the purchased goods, is entered into thecomputer pursuant to block 14, the information includes parameters thatrepresent the goods fair market value. For a purchased vehicle,information or parameters representing fair market value that are “fed”into the computer includes but is not limited to the year, make andmodel number of the vehicle, and the mileage, condition and generalperformance of the vehicle.

After providing information pertaining to purchased goods to thecomputer, the purchaser determines his or her equity in the purchasedgoods on the purchase date pursuant to block 16. Generally, thepurchaser's equity in the purchased goods on the day of purchase will bethe fair market value of the purchased goods minus the loan or financingrequired to purchase the goods, which should equal the downpayment thepurchaser advances to the seller for possession of the purchased goods.However, if the purchased goods have a fair market value greater orlower than the downpayment added to the funds borrowed to purchase thegoods, then the purchaser's equity in the purchased goods will becorrespondingly greater or lower than the downpayment. Irrespective ofthe fair market value of the purchased goods at the time of purchase,the objective is to establish the purchaser's equity in the purchasedgoods at the time of purchase at a dollar amount equal to or greaterthan the downpayment. The purchaser's equity at the time of purchase isentered into the computer.

Referring now to block 18, a time period is selected for protectingequity in the purchased goods, the time period being entered into thecomputer. The time period is provided by the purchaser and is based uponan estimated time period that the purchaser expects to own the purchasedgoods, or is based upon a time period corresponding to the useful lifeof the purchased goods, or is set via negotiations between the purchaserand an insurance company. After selecting a time period for protectingequity in the purchased goods, the purchaser's equity in the purchasedgoods is determined for each day during the selected time period therebyestablishing a constant or time varying equity dollar amount for thepurchased goods in the event the goods are damaged, lost, stolen or soldduring the selected time period (block 19).

Referring now to block 20, the purchaser then pays a one time “up-front”insurance premium to the insurance company for an insurance policy toinsure the purchaser's equity in the purchased goods over the selectedtime period, whereby the purchaser receives a payment from the insurancecompany in the event that the fair market value of the purchased goodsor vehicle is insufficient for the purchaser to receive a predeterminedor established equity dollar amount on a date, within the time period,that the purchaser disposes of the purchased goods.

Referring to decision block 21, if the purchaser maintains ownership ofthe purchased goods in an undamaged condition for a time period greaterthan the selected time period, then the purchaser's equity in thepurchased goods equals the fair market value minus the loan balance ofthe purchased goods (block 22), and the method for protecting thepurchaser's equity in the purchased goods terminates (block 24).

Returning to decision block 21, if the purchased goods are sold, lost,stolen or damaged before the selected time period is achieved, then thepurchaser's equity in the purchased goods in an undamaged condition isdetermined by the computer for the date the purchased goods are sold,lost, stolen or damaged (“the disposition date”—block 26). On the day ofpurchase, the purchaser's equity in the purchased goods is thedownpayment. Further, on the day of purchase, the purchaser decides ifhis or her equity in the purchased goods will have a constant value(equal to or less than the downpayment) during the entire selected timeperiod. Alternatively, the purchaser may decide to have the equitydiminish (as determined by a computer algorithm well known to those ofordinary skill in the art) during the preselected time period,whereupon, the purchaser procures a corresponding insurance policy thatguarantees the decided upon equity. The purchaser's insurance premiumwill ultimately be based upon the purchaser's choice of equityprotection for the purchased goods over the selected time period. Theone time, up-front insurance premium, which may include several paymentsmade on and/or after the purchase date, corresponds to the insurancepayment that may be made by the insurance company or provider to thepurchaser on a date subsequent to the vehicle purchase date.

The computer ultimately determines the equity for the purchased goodsfor each day within the selected time period. The computer sets thedaily equity value, which may or may not decrease over time based uponan algorithm corresponding to the depreciation of the purchased goods,via a program that assigns a dollar value to the purchased goods foreach day during the preselected time period; the purchaser and theinsurance company having agreed to the program daily dollar amounts whenthe purchaser pays the up-front insurance premium.

Referring now to decision block 30, after the computer determined thepurchaser's equity in the purchased goods on the damage or dispositiondate, if the purchaser's equity is equal to or less than the fair marketvalue minus the loan balance of the purchased goods, then the purchaserreceives the purchased good fair market value minus the loan balance,and the method 10 for protecting the purchaser's equity terminates(block 24). If the purchaser's equity is greater than the fair marketvalue minus the loan balance (decision block 30), then the purchaser ispaid by the insurance company the purchaser's equity minus the fairmarket value above the loan balance (block 32). In the event that theloan balance is greater than the fair market value of the purchasedgoods (decision block 36), a “gap” insurance policy pays off the amountof loan balance above the fair market value (decision block 38), and theinsurance company pays the purchaser the computer determined purchaser'sequity (block 40). If the loan balance is greater than the fair marketvalue of the purchased goods (decision block 36) and there is no gapinsurance policy (decision block 38), then the insurance company paysthe purchaser the computer determined purchaser's equity plus the loanbalance minus the fair market value of the purchased goods (block 42);the purchaser's net dollar amount being the purchaser's equity asdetermined by the computer.

In operation, a purchaser of goods (vehicles in particular) pays adownpayment predetermined up-front amount of money or value via trade,services or rebate. The purchaser requires that a predetermined portionof the money or trade value be protected over a preselected time periodthereby maintaining a calculable amount of owner's equity in thepurchased goods for any selected day during the preselected time period.Thus, the purchaser knows exactly what amount of money he or she willreceive for the purchased goods in the event the goods are damaged orsold during the time period, irrespective of the fair market value ofthe purchased goods or the remaining loan balance on the goods on thedamage or sales date.

The purchaser's equity or downpayment in the purchased goods that aredamaged within a predetermined time period, is protected via a method 10that includes providing a desk-top or lap-top computer 12. Informationpertaining to the purchased goods is fed in the computer therebyenabling the computer to calculate the purchaser's equity in the goodson the day of purchase 16. The purchaser then selects a time period 18for protecting his or her equity in the purchased goods. The selectedtime period is entered into the computer. The purchaser then determinesthe amount of equity to be maintained in the purchased goods for eachday of the selected time period 19. The equity amount for each dayduring the selected time period is entered into the computer,alternatively, an algorithm for determining the equity amount for eachday during the selected time period is entered into the computer. Thepurchaser then pays a one time up-front insurance premium 20 to aninsurance company for an insurance policy to insure the purchaser'sequity in the purchased goods for a predetermined amount for each dayduring the selected time period.

Referring to decision block 21, if the purchased goods are sold, lost,stolen or damaged after the selected time period, then the purchaserreceives nothing form the insurance company and is left with the fairmarket value of the purchased goods minus the outstanding loan balance(block 22). If the purchased goods are sold, lost, stolen or damagedduring the selected time period, then the purchasers equity in thepurchased goods for the sales or damage date is determined by thecomputer (block 26).

After the computer determines the purchaser's equity in the purchasedgoods on the damage or disposition date, if the computer determinedpurchaser's equity is equal to or less than the fair market value minusthe loan balance of the purchased goods on the damage or dispositiondate (decision block 30), then the purchaser receives the purchasedgoods fair market value minus the loan balance. More specifically, thepurchaser receives no payment from the insurance company and the methodof protecting the purchaser's equity stops (block 24). If the computerdetermined purchaser's equity is greater than the fair market valueminus the loan balance on the damage or disposition date (decision block30), then the purchaser is paid by the insurance company the computerdetermined purchaser's equity minus the fair market value of thepurchased goods above the loan balance (block 32).

The purchaser ultimately receives their equity in the purchased goodsvia an insurance policy or by selling damaged goods. Proceeds from theinsurance policy or the sold damaged goods are used first to pay theloan balance. The remaining proceeds are retained by the purchaser. Ifthe loan balance is greater than the fair market value of the purchasedgoods (block 36), and if there is a gap insurance policy (block 38), thepurchaser is paid a computer determined purchaser's equity (block 40);if there is no gap insurance policy (block 38), the purchaser is paid acomputer determined purchaser's equity plus the loan balance minus thefair market value of the purchased goods (block 42).

The foregoing description is for purposes of illustration only and isnot intended to limit the scope of protection accorded this invention.The scope of protection is to be measured by the following claims, whichshould be interpreted as broadly as the inventive contribution permits.

1. A method for protecting equity in purchased goods that are damaged within a predetermined time period after purchase, said method comprising the steps of: establishing the purchase date and price for the purchased goods; determining a purchaser's equity in the purchased goods on the purchase date; selecting a time period for protecting said purchaser's equity in the purchased goods; determining a purchaser's equity in the purchased goods on a disposition date for the purchased goods; calculating the difference between said purchaser's equity and a fair market value for the purchased goods on the damage or sales date; and paying the purchaser a computer determined amount when said purchaser's equity is greater than the fair market value for the purchased goods on the damage or sales date.
 2. The method of claim 1 wherein said step of determining said purchaser's equity in the purchased goods on the purchase date includes the step of recording the purchaser's cash payment or trade value.
 3. The method of claim 1 wherein said steps of established purchase date and price for the purchased goods, determining purchaser's equity in the purchased goods on the purchase date, and selecting a time period for protecting said purchaser's equity in the purchased goods, include the step of entering or inputting said purchase date, purchase price, purchaser's equity and time period into a computer.
 4. The method of claim 1 wherein said step of determining a purchaser's equity in the purchased goods on said disposition date for the purchased goods includes the step of decreasing said purchaser's equity in the purchased goods during said selected time period.
 5. The method of claim 4 wherein said step of decreasing said purchaser's equity in the purchased goods during said selected time period includes the step of decreasing said purchaser's equity upon a preselected depreciation algorithm.
 6. The method of claim 1 wherein said step of determining a purchaser's equity in the purchased goods on said disposition date for the purchased goods includes the step of researching national association appraisal manuals pertaining to the purchased goods.
 7. The method of claim 1 wherein said step of paying the purchaser said calculated difference includes the step of procuring an insurance policy that pays the purchaser.
 8. The method of claim 7 wherein said step of procuring an insurance policy includes the step of establishing a one time insurance premium amount required to be paid to an insurance provider, said insurance premium amount corresponding to the payment amount to be paid by the insurance provider to the purchaser in the event that the purchased goods are disposed of during said selected time period and the purchaser's equity is greater than the fair market value for the purchased goods on said disposition date.
 9. A method for maintaining equity in a vehicle for a predetermined time period after purchasing the vehicle, said method comprising the steps of: recording the purchase date and price of the vehicle; recording the amount paid by a purchaser of the vehicle on the purchase date; determining a time period for maintaining a purchaser's equity in the vehicle; calculating said purchaser's equity for the vehicle on a selected day during said time period; and paying the purchaser a computer determined amount.
 10. The method of claim 9 wherein the step of recording the purchase date and price of the vehicle includes the step of entering said date and price into a computer.
 11. The method of claim 9 wherein the step of recording the amount paid includes the step of entering said amount paid into a computer.
 12. The method of claim 9 wherein the step of determining a time period includes the step of entering a predetermined useful life time parameter for the vehicle into a computer.
 13. The method of claim 9 wherein the step of calculating a value includes the step of entering an algorithm into a computer that determines a value for the vehicle at a date subsequent to the vehicle purchase date. 14 The method of claim 9 wherein the step of paying the purchaser includes the step of procuring an insurance policy that pays the purchaser the difference between said calculate value and a smaller fair market evaluation for the vehicle.
 15. The method of claim 14 wherein the step of procuring an insurance policy includes the step of determining an insurance premium amount required to be paid by the purchaser to an insurance provider, said insurance premium amount corresponding to the payment amount to be made by said insurance provider to the purchaser on a date subsequent to the vehicle purchase date.
 16. The method of claim 15 wherein the step of procuring an insurance policy includes the step of paying one insurance premium for the vehicle on the vehicle purchase date.
 17. The method of claim 9 wherein the step of paying the purchaser includes the step of utilizing established vehicle evaluation information.
 18. A method for insuring a purchaser's downpayment when purchasing a vehicle, said method comprising the steps of: entering vehicle purchase parameters into a computer; entering a vehicle ownership time period into said computer; calculating via said computer, a purchaser's equity in the vehicle over said ownership time period; and paying an insurance premium to an insurance company to insure said calculated purchaser's equity in the vehicle over said ownership time period whereby the purchaser receives a payment from the insurance company in the event that the fair market value of the vehicle is insufficient for the purchaser to receive a calculated equity on a date, within said ownership time period, that the vehicle is sold, lost, stolen or damaged.
 19. The method of claim 18 wherein the step of entering vehicle purchase parameters includes the step of entering the vehicle purchase date, vehicle purchase price, amount paid by the purchaser to possess the vehicle, amount paid by a finance company to promote the purchase of the vehicle, the make of the vehicle, the year of the vehicle and the model of the vehicle.
 20. The method of claim 18 wherein the step of paying an insurance premium includes the step of paying at least one insurance premium payment to insure said calculated equity in the vehicle on behalf of the purchaser over said ownership time period, said insurance premium payment being paid on and/or after the vehicle purchase date.
 21. The method of claim 20 wherein the step of paying said insurance premium payment includes the step of negotiating said insurance premium payment with the insurance company. 